Wednesday, 12 July 2017

It's official UK Jobs Report day again, this month's data release from the Office for National Statistics mostly covering the period March to May 2017

The UK jobs market continues to outperform the wider
economy with employment rising (up 175,000 to a record high rate of 74.9%) and unemployment falling (down
64,000 to a 42 year low rate of 4.5%) in the latest quarter, defying the background of slower GDP growth. May
also saw a welcome pick-up in average regular weekly pay growth from 1.8% to
2.%. But what a buoyant labour market giveth, much higher price inflation has
more than taketh away, with average real weekly wages falling by 0.5%.

For the
time being therefore any negative effect of Brexit uncertainty on the UK
workforce is coming indirectly via the higher prices people are facing in the
shops rather than directly in terms of a dampening impact on job opportunities
or pay packets. However, the longer the real wage squeeze continues the greater
the risk that weaker demand for goods and services will feed through to weaker
demand for labour and lead to lower business investment, thereby further
reducing the prospect of a productivity led boost to real incomes.